Dragon Sourcing - 龙 源 Delivering sustainable sourcing value from emerging markets
Strategic Sourcing Case Study – Aluminum Industry
Agenda
1.
Objectives , work plan and time line
2.
Approach
3.
Results
2
Objectives and approach Dragon Sourcing approach
Context Objectives: • Identify new potential competitive suppliers in China
1. Demand Analysis: Work with Client to define and understand the products and requirements (specs, volumes, materials, production technology requirements)
Categories involved 1.Spools 2.Steel pipe 3.Wear parts & liners 4.Electrical cables (HV/LV) and ladders 5.Collector and Copper Bars 6.HDPE pipe 7.Komatsu mobile equipment parts 8.Caterpillar mobile equipment parts 9.Tires 10.PLC
2. Supply Market Analysis: Identify long list of potential suppliers in China and India by leveraging B2B Websites, DS Database, Fair catalogues, Chamber of Commerce, Magazines, Network, References. 3. Telephone Pre-screening: Selection of suppliers to be included in the RFI/RFQ process by telephone pre-screening based on agreed simple criteria (e.g. capability to make the product, minimum company size, interest in participating) 4. Administer NDA: NDA provided by Client is distributed to the suppliers who passed pre-screen , with telephone follow-up to push for maximum signing. 5. Develop RFI/RFQ & Scorecard template: Prepare an RFI/RFQ document, with an aligned Balanced Scorecard that has the objective to pre-qualify the capabilities of the suppliers, including: Background, Financials, Client and product experience, Quality certification & processes, Social Responsibility, Manufacturing/technology capability
Deliverables: • Supplier data base • NDA signed • RFI / RFQ report • Score Card • Company profiles • Recommended audit supplier list
6. Administer the RFI/RFQ: The RFI/RFQ is distributed to the relevant suppliers who have signed NDA, with telephone follow-up to push for maximum participation. 7. Analyze RFI /RFQ Responses: Analysis of RFI/RFQ responses to objectively rank the suppliers by capability and competitiveness, and to develop sense for price points 3
The project was scheduled for 14 working weeks period with a weekly follow report sent every Friday. Step
Who
0
Kick off
Client/DS
1
Demand Analysis
Client/DS
2
Supply Market Analysis
DS
3
Telephone prescreening
DS
4
NDA administration
DS
5
Develop the RFIRFQ
Client/DS
6
Conduct RFI/RFQ Administration
DS
7
Analyze RFI/RFQ Responses
DS
W0
W1
W2
W3
W4
W5
W6
W7
W8
Not-started
4
W9
Started
W 10
Delayed
W 11
Finished
W 12
W 13
Holiday
W 14
TODAY
Milestones
Agenda
1.
Objectives , work plan and time line
2.
Category Approach (HDPE pipe)
3.
Results
5
Demand analysis, total 24 items, RFQ spend USD 1.05 M. #
Description
HS code
Annual quantity (pc)
1
DN450 PN10 PE100 (12m Lengths)
39172200
150
2
DN355 PN25 CO-EX WHITE (12m Lengths)
39172200
34
3
DN200 PN10 PE100 CO-EX WHITE (12m Lengths)
39172200
70
4
100mm X 100m DRAIN COIL
39172200
177
5
DN355 PN16 SDR 11 CO-EX WHITE (12m Lengths)
39172200
49
6
DN250 PN16 PE100 CO-EX WHITE (12m Lengths)
39172200
21
7
DN200 PN16 S1 SDR11 CO-EX (12m Lengths)
39172200
16
8
DN400 PN12.5 PE100 (12m lengths)
39172200
48
9
DN315 PE100 PN12.5 (12m lengths)
39172200
72
10
DN160 PN12.5 PE100 (12m lengths)
39172200
144
11
DN200 PN12.5 PE100 (12m lengths)
39172200
279
12
DN400 PN12.5 PE100 (12m lengths)
39172200
48
13
DN315 PN16 PE100 CO-EX WHITE (12m lengths)
39172200
151
14
DN315 PN12.5 PE100 CO-EX WHITE (12m lengths)
39172200
54
15
DN280 PN16 PE100 CO-EX WHITE (12m lengths)
39172200
60
16
DN200 PN12.5 PE100 CO-EX WHITE (12m Lengths)
39172200
151
17
DN450 PN12.5 PE100 (12m Lengths)
39172200
30
18
DN355 PN10 PE100 (12m Lengths)
39172200
120
19
450mm Stub Flanges PN10 and ANSI backing ring to suit
39172200
120
20
450mm fully moulded long spigot equal TEE PE100 pn10
39172200
42
21
DN450 PN10 CO-EX WHITE (12m Lengths)
39172200
62
22
DN355 PN16 PE100 CO-EX WHITE (12m Lengths)
39172200
26
23
100mm X 100m DRAIN COIL with RTA Standard Sock
39172200
140
24
DN630 PN16 PE100 CO-EX WHITE (12m Lengths)
39172200
41
6
126 suppliers identified, all called, 48 passed pre-screen, total 48 RFI/RFQ sent, 2 RFQ and 22 RFI/RFQ received.
Step
HDPE Pipe
Total number of suppliers
126
Supplier called
126
Shortlisted supplier after call
48
RFI/RFQ sent
48
RFQ received
2
RFI/RFQ received
22
7
Balance Score card used to rank the suppliers Business information
Weight of criteria
Year Founded
15%
Turnover in 2017 in USD
15%
Number of employees
10%
English speaking R&D
5%
Export experience
10%
Profile of Top Customers
15%
Refinery industry experience Export experience to Australia Provide company presentation
10% 5% 5%
Cooperation during RFI/RFQ
5%
Completeness of RFI/RFQ
5%
Subtotal
100%
Production
Weight of criteria
Production of HDPE pipe, Co-extrusion HDPE pipe, PE coil
15%
Annual production in 2017- HDPE pipe ( Ton )
15%
Annual production in 2017- Co-extrusion HDPE pipe ( Ton )
10%
Annual production in 2017- HDPE coil ( Ton )
5%
Scoring 1=After 2010 2=Between 2000-2010 3=Before 2000 1=Less than 5M 2=5-10M 3=10-20M 4=above 20M 1= < 100 2=100-200 3=201-500 4=>500 0=No1=Yes 1=Less than 5 years 2=5-10 years 3=More than 10 years 1=Local customers 2=National customers 3=International customers as Client 0=No1=Yes 0=No1=Yes 0=No1=Yes 1= Poor 2= Satisfactory 3= Excellent 1= Poor (< 70%) 2= Satisfactory (70-85%) 3= Excellent(>85%)
Scoring 1= One kind 2=Two kinds 3=All 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000 1 = < 500 2= 501-100 3 = 100001-2000 4 => 2000
Max Score per criteria
Weight of the section
5%
Extrusion produciton line
10%
Co-extrusion produciton line
10%
AS/NZS 4130 standard pipe
5%
0=No 1=Yes
1
Supply HDPE geomembrane with pipe
5%
0=No 1=Outsource 2=Produce in house
2
3
4
1= Part of Client requirement 2=Cover all Client requirement 1= 1 2=2-3 3=>3 1= 1 2=2-3 3=>3
Pipe/coil diameter range
4
2 3
3
ERP system
5%
0=No 1=Yes
1
1
Product/service traceability system
5%
0=No 1=Yes
1
3
Equipment maintenance program in place
5%
0=No 1=Yes
1
5%
0=No 1=Yes
1
30%
Formalďź?documented inventory management system Subtotal
3
Quality system
1 1 1
ISO 9001
3
100% Weight of criteria 20%
ISO 14001
6%
Company-wide quality manual
6%
Incoming material inspection and report
6%
On line quality inspection and report
6%
Final products inspection and report?
6%
Hydraulic strength test in house
10%
Yield strength test in house
7%
Weather resistance test in house
7%
Oxidation induction time test in house
7%
Longitudinal shrinkaget test in house
7%
Elongation at break test in house
6%
3 30% Weight of Max Score per the criteria section 3
4 35% 4
4
Radiation Absorption test in house
8
Subtotal
6% 100%
Scoring 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes 0= No 1= Yes
35% Weight of Max Score per the criteria section 1 1 1 1 1 1 1
35%
1 1 1 1 1 1 35%
20 suppliers have potential savings ranging from 0.3% to 12.8%. Potential saving & RFI score & items quoted Potential Saving(USD)
RFI score
150000
Items quoted 100
80
100000 60
40 50000
20
0
0
9
6 green highlighted suppliers were recommended for auditing Supplier RFI score & potential saving & Items quoted RFI score
Items quoted
Potential Saving(USD)
100
150000 94
92
91
90
89
87
85
84
84 80
79
80
79
78 75
73
71
71 64
63
62
100000
62
60 52
40 50000
24 20
21
22
22
11
24
24
22
24
22
19 10
9
12
24
22
19
17 10
5
12 8
8
7 0
0
0
0
10
1st priority
2nd priority
Company profile xxxxxxx Company Name Address Town Province Company Website Contact Person Title Email Tel Fax Mobile phone
COMPANY INFORMATION xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx CONTACT PERSON INFORMATION xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx xxxxxxx
What is the percentage of turnover distributed to:
What's the nature of your company? (Private, state owned, joint venture, etc)
Public listed
How many square meters(m²) does your factory occupy ? How many employees do you have? What industry does your company mainly serve?
Does your company have an export license ?(yes or no) How many years of export experience do you have? What Incoterms can your company quote and operate?
1
US
Rest of the World
2.0% Country China China China
1.7% % of sales 4% 3% 7%
ISO14001
Shortly describe your policy to cover health and safety.
OHSAS18001
Have any western companies conducted a social audit of your company during the last two years?
No PRODUCTION
Your company's business registration number What is your turnover in million USD ?
Ranking
Europe
Shortly describe your policy to cover environment and conservation.
2008
94
95% 1.3% Clients Industry Shenhua Coal Hechuang Chemical Alxa Mining CORPORATE RESPONSIBILITY
Who are your top 3 Clients? 1 2 3
BUSINESS INFORMATION What date was your company founded?
Domestic
RFI/RFQ score
xxxxx 2017
2016
2015
150
119
99
159750 1074 infrastructure, fuel gas, industrial and mining enterprises, electricity and heating power, residential buildings and other areas. Yes
Does your company produce right listed product?(Y/N) Annual capacity in 2017(Ton) What's your company's current capacity utilization? (%) How many production lines does your company have? Your company's pipe/coil diameter range (mm) Does your company supply right listed pipe/coil to any refinery company? (Y/N)
HDPE pipe
Co-extruded HDPE pipe
HDPE coil
Y
Y
Y
32000
28500
350
87%
87%
87%
17
14
3
20mm-2000mm
20mm-1600mm
20mm-63mm
Y
Y
Y
Does your company have How many machine below /production equipment in house? line does your (Yes/No) company have?
4
Details ( Brand, speed, years acquired，etc )
Extrusion
Y
17
Bottenfeld，2012
Co-extrusion
Y
14
Bottenfeld，2012
FOB, CIF
11
Company certificate and picture xxxxxxx Business registration
ISO 9001
ISO14001
Factory entrance
Workshop
Machinery
Machinery
Warehouse
Office
12
Agenda
1.
Objectives , work plan and time line
2.
Approach
3.
Results
13
In total, 1039 suppliers identified, 428 passed pre-screen, 92 NDA signed, 14 RFQ and 106 RFI/RFQ received.
#
Category
# of supplier identified
Tel Pre-screen called
# of supp pas Tel Pre-screen
NDA sent
NDA signed
RFI/RFQ sent
62
30
30
RFQ only
RFI/RFQ received
1
Pipe spools
127
127
62
2
Steel pipe
122
122
43
3
Wear parts & liners
114
114
52
52
29
29
13
4
Electrical cables (HV/LV) and ladders
180
180
37
37
23
23
18
5
Collector and Copper Bars
53
53
15
15
10
10
6
6
HDPE pipe
116
126
48
53
2
22
7
Komatsu mobile equip parts & components
114
114
44
44
2
4
8
Caterpillar mobile equip parts & components
56
56
46
46
1
8
9
Tyres
102
102
37
37
4
6
10
PLC
45
45
44
44
1039
1039
428
Total
14
43
166
92
359
9
5
13
7
14
Donâ&#x20AC;&#x2122;t need sign NDA
106
79 out of 88 suppliers have potential savings ranging from 1.8%-26.5%. For the other 4 categories, savings were not analyzed because client current prices were not available. Potential saving summary
No of RFQ items
Number of Number of Number of supplies suppliers Suppliers with responding to responding to potential RFQ only RFI/RFQ savings
Number of items with savings
1 Pipe spools
16
9
9
15
2.0%
29.0%
14.0%
2 Steel pipe
7
13
17
4
0.4%
5.3%
3.7%
3 Wear parts & liners
6
13
13
6
10.0%
43.5%
26.5%
15
18
18
9
0.6%
9.5%
3.8%
5 Collector and Copper Bars
10
6
2
6
0.5%
3.0%
1.8%
6 HDPE pipe
24
2
22
20
16
0.1%
12.8%
4.5%
78
7
81
79
56
#
4
Category
Electrical cables (HV/LV) and ladders
Total
5
15
Min potential Max potential saving saving
Average potential saving